Procurement Terms
Subject
A-Z
Offshoring refers to the practice of a company relocating its business operations, such as manufacturing or service provision, to a foreign country. The aim of offshoring is usually to take advantage of lower labor costs, tax incentives, and favorable regulations in the foreign country, which can result in lower production costs and increased profitability for the company.
Offshoring can involve either setting up new operations in a foreign country or outsourcing the work to a third-party service provider. For example, a company based in the United States may establish a new manufacturing facility in China or outsource its customer service operations to a call center in India.
While offshoring can provide benefits such as cost savings and access to new markets, it can also be controversial. Critics argue that offshoring can lead to job losses in the company's home country and can negatively impact local economies in the foreign country. Additionally, offshoring can also present challenges related to quality control, intellectual property protection, and cultural differences.